“The 13th Five-Year Plan emerges: strong push for coal chemical industry

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The development roadmap for the petrochemical industry during the 13th Five-Year Plan period has been unveiled. Reporters from the Economic Reference News have learned from various sources that, commissioned by the relevant authorities, the China Petroleum and Chemical Industry Federation (hereinafter referred to as the “Petrochemical Federation”) has, since 2014, organized its specialized committees to carry out a series of preliminary research and drafting efforts for the 13th Five-Year Plan. To date, a comprehensive set of development guidelines for the entire industry during the 13th Five-Year period has been established, with the “Guidelines for the Development of the Petroleum and Chemical Industry during the 13th Five-Year Period” as the core, supplemented by two special plans related to high-end equipment and 20 other specialized plans focusing on areas such as natural gas. According to the plan, during the 13th Five-Year Plan period, the average growth rate of the main business revenue across the industry is expected to drop by almost half, to around 7%, reaching 19.8 trillion yuan by 2020. While focusing on transforming and upgrading traditional industries, significant efforts will be made to develop strategic emerging industries such as new chemical materials, biochemistry, modern coal chemistry, and productive service industries. In addition, reforms will be deepened and openness expanded, the oil trade system will be reformed, restrictions on crude oil imports will be eased, and unified qualification standards for crude oil traders will be established. It also advances the reform of the consumption tax on refined oil, abolishes the special oil revenue levy policy, and establishes a **risk exploration fund. “The world economy is set for a weak recovery over the next five years, with an increasing number of uncertainties. International oil prices are likely to be low at first and then rise by 2020, but they will not return to high levels (80 dollars per barrel); fluctuations around moderate levels will be the norm. China’s economic development has entered a new normal, and deep adjustments in the industrial sector will continue. The demand for products from the oil and chemical industries, which are key sectors of the economy, will also slow down. Competition in the markets of East Asia and Southeast Asia is becoming more fierce, while the emergence of new business models and technologies brings additional uncertainties. ”Li Shousheng, president of the Petrochemical Federation, analyzed previously. Therefore, the primary focus during the 13th Five-Year Plan period is to work on upgrading traditional industries. Following the principles of strict control over new capacity additions, differentiated treatment, targeted measures, and gradual resolution of issues, efforts will be made to advance the development of petrochemical industry bases in an orderly manner. The layout of petrochemical projects along the land-based crude oil import routes between China and Russia, Myanmar, and Kazakhstan will be improved. At the same time, new refining capacities and expansions in the production of chemical products will be strictly restricted, with an acceleration in the phasing out of refining facilities with a capacity of 2 million tons or less that do not meet standards regarding product quality and environmental protection. Another key focus is to vigorously develop strategic emerging industries. Chemical new materials will focus on three key areas: high-end polyolefin plastics, engineering plastics, and special rubbers, with the goal of raising the industry’s overall self-sufficiency rate to over 80% by 2020. In modern coal chemical industry, six major industrial bases are being developed in key areas such as Yimin in eastern Inner Mongolia, Ili in Xinjiang, northern Shaanxi, and Ningdong. By 2020, the production capacity for coal-to-oil is expected to reach 10 million tons per year, that for coal-to-natural gas 10 billion cubic meters per year, and that for coal-to-olefins 13 to 15 million tons per year. At the same time, efforts will be made to promote the large-scale and commercial use of bioprocessing products such as bio-based new materials, bio-based chemicals, and biofuels; the goal is to reach a production volume of 5 million tons of biomass fuel ethanol and 2 million tons of biodiesel by the end of the 13th Five-Year Plan period. In addition, accelerate the development of productive service sectors such as third-party logistics, inspection, testing, and certification, as well as e-commerce. The development of the aforementioned industries also relies on deeper reforms and greater openness. It is understood that throughout the years, the upstream exploration and development sector of the oil and gas industry has been monopolized by four companies: CNPC, Sinopec, CNOOC, and Yanchang Oilfield, while the rights to import crude oil are also concentrated in these five companies. “During the 13th Five-Year Plan period, reforms to the oil trade system will be Advance d, restrictions on crude oil imports will be eased, and qualified refining companies will be granted the authority and right to import crude oil. At the same time, it is necessary to appropriately eliminate the policy distinction between state-owned and non-state-owned crude oil trade, and establish unified qualification standards for crude oil traders. Improve the management measures for refined oil export quotas, make full use of the policy advantages of free trade zones and bonded zones, and accelerate the development of the crude oil futures market. At the same time, reforms to oil and gas prices will be pursued to establish a price-determined by-the-market mechanism. Around 2017, restrictions on refined oil prices were largely lifted, natural gas prices were fully rationalized, and the liberalization of natural gas resources and sales prices was accelerated. **Pricing** was implemented for those segments involving network-type natural monopolies, while cross-subsidies were properly managed and gradually reduced. The Petrochemical Federation also proposed in its plan to advance reforms related to mixed-ownership structures, thereby fostering the joint development of state-owned enterprises and those owned by other entities. In addition, advance the reform of the consumption tax on refined oil, abolish the special petroleum revenue levy policy, and establish a **risk exploration fund. Increase policy support for unconventional hydrocarbons such as shale oil and gas and tight oil and gas; reduce import tariffs on natural rubber to support the development of the domestic rubber industry. (Economic Reference News)